-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JRgCQuOdMBOZCk0w0puy4IT3VDO6d6KHaCpXMcm7k1uEvkZD82ji4sUI8xGKS+rD oEvFltwqVooh0z85HouYZQ== 0000950144-97-004136.txt : 19970415 0000950144-97-004136.hdr.sgml : 19970415 ACCESSION NUMBER: 0000950144-97-004136 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970414 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: REXALL SUNDOWN INC CENTRAL INDEX KEY: 0000901620 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 591688986 STATE OF INCORPORATION: FL FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21884 FILM NUMBER: 97580081 BUSINESS ADDRESS: STREET 1: 851 BROKEN SOUND PARKWAY N W CITY: BOCA RATON STATE: FL ZIP: 33487 BUSINESS PHONE: 4072419400 MAIL ADDRESS: STREET 1: 4031 NE 12TH TERRACE CITY: FT LAUDERDALE STATE: FL ZIP: 33334 10-Q 1 REXALL SUNDOWN FORM 10-Q 02/28/97 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 1997 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----- ------- Commission File Number 0-21884 ------- REXALL SUNDOWN, INC. -------------------- (Exact Name of Registrant as Specified in its Charter) FLORIDA 59-1688986 ------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 851 Broken Sound Parkway, NW, Boca Raton, Florida 33487 ------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (561) 241-9400 -------------- Indicate by check mark whether Registrant has (1) filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No --- ---- As of April 11, 1997, the number of shares outstanding of the Registrant's Common Stock was 33,380,204. 2 REXALL SUNDOWN, INC. TABLE OF CONTENTS
Page No. -------- PART I FINANCIAL INFORMATION Item 1 Financial Statements Consolidated Balance Sheets as of February 28, 1997 and August 31, 1996 ...................................................... 3 Consolidated Statements of Operations for the Three and Six Months Ended February 28, 1997 and February 29, 1996 ...................................................................... 4 Consolidated Statements of Cash Flows for the Six Months Ended February 28, 1997 and February 29,1996 ....................................................................... 5 Notes to Consolidated Financial Statements ................................................. 6 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations ........................................... 9 PART II OTHER INFORMATION .......................................................................... 13 SIGNATURES ......................................................................................... 15
-2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS REXALL SUNDOWN, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)
February 28, August 31, 1997 1996 --------- --------- ASSETS Current assets: Cash and cash equivalents $ 38,618 $ 13,450 Restricted cash 88 278 Marketable securities 60,146 7,988 Trade accounts receivable, net 18,077 11,410 Inventory 28,125 28,179 Prepaid expenses and other current assets 5,764 5,018 Net current assets of discontinued operations 3,917 3,855 --------- --------- Total current assets 154,735 70,178 Property, plant and equipment, net 25,843 24,078 Other assets 10,013 8,839 --------- --------- Total assets $ 190,591 $ 103,095 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 10,593 $ 5,599 Accrued expenses and other current liabilities 10,999 10,100 Current portion of long-term debt 306 346 --------- --------- Total current liabilities 21,898 16,045 Long-term debt - 105 Other liabilities 101 253 --------- --------- Total liabilities 21,999 16,403 --------- --------- Shareholders' equity: Preferred stock, $.01 par value; authorized 5,000,000 shares, no shares outstanding - - Common stock, $.01 par value; authorized 100,000,000 shares, shares issued: 33,339,446 and 30,660,128, respectively 333 307 Capital in excess of par value 119,944 53,563 Retained earnings 48,736 32,943 Cumulative translation adjustment (421) (121) --------- --------- Total shareholders' equity 168,592 86,692 --------- --------- Total liabilities and shareholders' equity $ 190,591 $ 103,095 ========= =========
See accompanying notes -3- 4 REXALL SUNDOWN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended ---------------------------- ---------------------------- February 28, February 29, February 28, February 29, 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Net sales $ 58,534 $ 40,371 $ 114,604 $ 81,050 Cost of sales 22,017 15,904 42,696 32,287 ------------ ------------ ------------ ------------ Gross profit 36,517 24,467 71,908 48,763 Selling, general and administrative expenses 24,438 18,221 48,893 36,977 ------------ ------------ ------------ ------------ Operating income 12,079 6,246 23,015 11,786 Other income (expense): Interest income 1,383 195 1,952 289 Other income 31 10 31 20 Interest expense (6) (14) (15) (19) ------------ ------------ ------------ ------------ Income before income tax provision 13,487 6,437 24,983 12,076 Income tax provision 4,936 2,363 9,190 4,446 ------------ ------------ ------------ ------------ Net income $ 8,551 $ 4,074 $ 15,793 $ 7,630 ============ ============ ============ ============ Net income per common share $ 0.25 $ 0.13 $ 0.47 $ 0.25 ============ ============ ============ ============ Weighted average common shares outstanding 34,370,914 30,385,182 33,396,511 30,205,149 ============ ============ ============ ============
See accompanying notes -4- 5 REXALL SUNDOWN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Six Months Ended ------------------------ February 28, February 29, 1997 1996 --------- ----------- Cash flows provided by (used in) operating activities: Net income $ 15,793 $ 7,630 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,654 1,268 Amortization 804 300 Gain on sale of property and equipment - (19) Deferred income taxes 88 1,975 Foreign exchange translation adjustment (300) (34) Changes in assets and liabilities: Trade accounts receivable (6,667) (3,046) Inventory 54 1,360 Prepaid expenses and other current assets (746) (1,841) Other assets (1,978) (2,121) Accounts payable 4,994 303 Accrued expenses and other current liabilities 3,120 3,620 Other liabilities (152) 100 Discontinued operations - non cash charges and changes in assets and liabilities (62) 3,741 -------- -------- Net cash provided by (used in) operating activities 16,602 13,236 -------- -------- Cash flows provided by (used in) investing activities: Acquisition of property, plant and equipment (3,419) (1,786) Purchase of marketable securities (58,146) - Proceeds from sale of marketable securities 5,988 - Proceeds from sale of fixed assets - 22 Other 190 - -------- -------- Net cash used in investing activities (55,387) (1,764) -------- -------- Cash flows provided by (used in) financing activities: Net proceeds from offering 62,287 - Principal payments on long-term debt (145) (179) Exercise of options to purchase common stock 1,811 3,555 -------- -------- Net cash provided by financing activities 63,953 3,376 -------- -------- Net increase (decrease) in cash and cash equivalents 25,168 14,848 Cash and cash equivalents at beginning of period 13,450 1,154 -------- -------- Cash and cash equivalents at end of period $ 38,618 $ 16,002 ======== ========
See accompanying notes -5- 6 REXALL SUNDOWN, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 1. BASIS OF PRESENTATION AND OTHER MATTERS The accompanying unaudited consolidated financial statements, which are for interim periods, do not include all disclosures provided in the annual consolidated financial statements. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the footnotes thereto contained in the Rexall Sundown, Inc. (the "Company") Annual Report on Form 10-K for the year ended August 31, 1996, as filed with the Securities and Exchange Commission. The August 31, 1996 balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the financial statements. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Certain prior period amounts have been reclassified to conform with the fiscal 1997 presentation. 2. NET INCOME PER COMMON SHARE Net income per common share is calculated by dividing net income by weighted average shares outstanding, giving effect to common stock equivalents (common stock options). 3. INVENTORY The components of inventory as of February 28, 1997 and August 31, 1996 are as follows:
February 28, 1997 August 31, 1996 ----------------- --------------- (Audited) Raw materials $13,284 $11,609 Work in process 1,034 1,732 Finished products 13,807 14,838 ------- ------- $28,125 $28,179 ======= =======
-6- 7 REXALL SUNDOWN, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (Dollars in thousands) (Unaudited) 4. SALES TO A MAJOR CUSTOMER The Company had sales to a national retailer which represented approximately 18.1% and 5.6% of net sales for the three months ended February 28, 1997 and February 29, 1996, respectively, and 15.8% and 4.5% of net sales for the six months ended February 28, 1997 and February 29, 1996, respectively. Trade accounts receivable from this customer amounted to approximately $7,579 and $615 at February 28, 1997 and August 31, 1996, respectively. 5. CONTINGENCIES The Company believes that it is not presently a party to any litigation, the outcome of which would have a material adverse impact on the Company. 6. SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES The Company recognized a reduction of income taxes payable and a corresponding increase in additional paid-in capital related to the exercise of stock options of $1,328 and $649 for the three months ended February 28, 1997 and February 29, 1996, respectively, and $2,309 and $1,629 for the six months ended February 28, 1997 and February 29, 1996, respectively. 7. COMMON STOCK TRANSACTIONS On November 5, 1996, the Company consummated a public offering of 4,000,000 shares of common stock. Of those shares, 2,000,000 were sold by the Company and 2,000,000 were sold by certain shareholders of the Company. On December 3, 1996, the underwriters' over-allotment option to purchase an additional 600,000 shares was exercised. Of those 600,000 shares, 400,000 were sold by the Company and 200,000 were sold by a shareholder of the Company. The Company intends to use the net proceeds of approximately $62.3 million primarily to acquire complementary products, product lines or businesses, to provide working capital and for general corporate purposes. 8. EVENTS SUBSEQUENT TO FISCAL YEAR END In December 1996, the Company entered into a revolving line of credit with a financial institution with a borrowing amount of $20 million, which line of credit is subject to annual extensions. Borrowings under the line of credit will bear interest at LIBOR plus 1.5 percent. The line of credit is collateralized by accounts receivable and inventory and is subject to compliance with -7- 8 REXALL SUNDOWN, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (Dollars in thousands) (Unaudited) 8. EVENTS SUBSEQUENT TO FISCAL YEAR END, continued certain financial covenants and ratios. There were no amounts outstanding under this revolving line of credit at February 28, 1997. As of April 1, 1997, the Company extended the maturity of the collateralized note related to the sale of the assets of Pennex Laboratories, Inc. to July 31, 1997. Interest continues to accrue and is payable in accordance with the previous terms. Assuming full collection of the balance of the collateralized note, the Company expects to record in the fourth quarter of fiscal 1997 a reduction to the estimated loss on disposition of approximately $1,400 (net of tax), or $.04 per share, which would be reflected as an adjustment to discontinued operations. -8- 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL Rexall Sundown, Inc. (the "Company") develops, manufactures, markets and sells vitamins, nutritional supplements and consumer health products. The Company distributes its products using three channels of distribution: sales to retailers; direct sales through independent distributors; and mail order. On November 5, 1996, the Company consummated a public offering (the "Offering") of 4,000,000 shares of Common Stock. Of those shares, 2,000,000 were sold by the Company and 2,000,000 were sold by certain shareholders of the Company. On December 3, 1996, the underwriters' over-allotment option to purchase an additional 600,000 shares was exercised. Of those 600,000 shares, 400,000 were sold by the Company and 200,000 were sold by a shareholder of the Company. The Company intends to use the net proceeds of approximately $62.3 million primarily to acquire complementary products, product lines or businesses, to provide working capital and for general corporate purposes. RESULTS OF CONTINUING OPERATIONS Three Months Ended February 28, 1997 Compared to Three Months Ended February 29, 1996 Net sales for the three months ended February 28, 1997 were $58.5 million, an increase of $18.2 million or 45.0% over the comparable period in fiscal 1996. Of the $18.2 million increase, sales to retailers accounted for $11.8 million, an increase of 56.9% over the comparable period in fiscal 1996. The gain in sales to retailers was primarily attributable to new customers added in the second half of fiscal 1996 as well as an increase in the Company's base business. Net sales of the Company's direct sales subsidiary, Rexall Showcase International, Inc. ("Rexall Showcase"), increased by $5.9 million, an increase of 38.7% over the comparable period in fiscal 1996. The increase in direct sales was partially due to the commencement of Rexall Showcase's operations in Mexico in February 1996 and South Korea in April 1996. Net sales of the Company's mail order division, SDV, increased by $466,000 or 10.6% over the comparable period in fiscal 1996. The increase in net sales in each division was also due to increased unit sales. Gross profit for the three months ended February 28, 1997 was $36.5 million, an increase of $12.1 million or 49.3% over the comparable period in fiscal 1996. As a percentage of net sales, gross profit increased from 60.6% for the three months ended February 29, 1996 to 62.4% for the three months ended February 28, 1997. The increase in gross margin was due, in part, to improved margins as a result of manufacturing efficiencies achieved from higher volume at the Company's vitamin manufacturing facility as well as a favorable product mix. -9- 10 Selling, general and administrative expenses for the three months ended February 28, 1997 were $24.4 million, an increase of $6.2 million or 34.1% over the comparable period in fiscal 1996. As a percentage of net sales, such expenses decreased from 45.1% for the three months ended February 29, 1996 to 41.8% for the comparable period in fiscal 1997, primarily as a result of increased net sales and the relatively fixed nature of such expenses except for the commission expense of Rexall Showcase, which is variable and comprises the majority of Rexall Showcase's selling, general and administrative expenses. Interest income for the three months ended February 28, 1997 was $1.4 million, as compared to $195,000 for the comparable period in fiscal 1996. Such increase was primarily a result of investment of the Company's available cash balances, which were higher in the second quarter of fiscal 1997 than the comparable period in fiscal 1996 primarily due to the net proceeds of $62.3 million received from the Offering. Income before income tax provision was $13.5 million for the three months ended February 28, 1997, an increase of $7.1 million or 109.5% over the comparable period in fiscal 1996. As a percentage of net sales, income before income tax provision increased from 15.9% for the three months ended February 29, 1996 to 23% for the comparable period in fiscal 1997. Net income was $8.6 million for the current fiscal quarter, an increase of $4.5 million or 109.9% from the prior year's comparable quarter, due to the reasons described above. Six Months Ended February 28, 1997 Compared to Six Months Ended February 29, 1996 Net sales for the six months ended February 28, 1997 were $114.6 million, an increase of $33.6 million or 41.4% over the comparable period in fiscal 1996. Of the $33.6 million increase, sales to retailers accounted for $22.4 million, an increase of 56.1% over the comparable period in fiscal 1996. The gain in sales to retailers was primarily attributable to new customers added in the second half of fiscal 1996 as well as an increase in the Company's base business. Net sales of the Company's direct sales subsidiary, Rexall Showcase, increased by $10.8 million, an increase of 32.9% over the comparable period in fiscal 1996. The increase in direct sales was partially due to the commencement of Rexall Showcase's operations in Mexico in February 1996 and South Korea in April 1996. Net sales of the Company's mail order division, SDV, increased by $367,000 or 4.4% over the comparable period in fiscal 1996. The increase in net sales in each division was also due to increased unit sales. Gross profit for the six months ended February 28, 1997 was $71.9 million, an increase of $23.1 million or 47.5% over the comparable period in fiscal 1996. As a percentage of net sales, gross profit increased from 60.2% for the six months ended February 29, 1996 to 62.7% for the six months ended February 28, 1997. The increase in gross margin was due, in part, to improved margins as a result of manufacturing efficiencies achieved from higher volume at the Company's vitamin manufacturing facility as well as a favorable product mix. -10- 11 Selling, general and administrative expenses for the six months ended February 28, 1997 were $48.9 million, an increase of $11.9 million or 32.2% over the comparable period in fiscal 1996. As a percentage of net sales, such expenses decreased from 45.6% for the six months ended February 29, 1996 to 42.7% for the comparable period in fiscal 1997, primarily as a result of increased net sales and the relatively fixed nature of such expenses except for the commission expense of Rexall Showcase, which is variable and comprises the majority of Rexall Showcase's selling, general and administrative expenses. Interest income for the six months ended February 28, 1997 was $2.0 million, as compared to $289,000 for the comparable period in fiscal 1996. Such increase was primarily a result of investment of the Company's available cash balances, which were higher in the first half of fiscal 1997 than the comparable period in fiscal 1996 primarily due to the net proceeds of $62.3 million received from the Offering. Income before income tax provision was $25 million for the six months ended February 28, 1997, an increase of $12.9 million or 106.9% over the comparable period in fiscal 1996. As a percentage of net sales, income before income tax provision increased from 14.9% for the six months ended February 29, 1996 to 21.8% for the comparable period in fiscal 1997. Net income was $15.8 million for the first six months of the current fiscal year, an increase of $8.2 million or 107% from the first six months of the prior fiscal year due to the reasons described above. SEASONALITY The Company believes that its business is not subject to significant seasonality based on historical trends, with the exception of Rexall Showcase, which typically experiences lower revenues in the second and fourth fiscal quarters due to winter and summer holiday seasons, respectively. LIQUIDITY AND CAPITAL RESOURCES The Company had working capital of $132.8 million as of February 28, 1997, compared to $54.1 million as of August 31, 1996. This increase was principally the result of increased cash and cash equivalents and marketable securities as a result of the net proceeds from the Offering. Net cash provided by operating activities for the six months ended February 28, 1997 was $16.6 million compared to $13.2 million for the comparable period in fiscal 1996. Net cash provided by operating activities increased primarily due to increased net income and increased accounts payable, partially offset by increases in accounts receivable. Net cash used in investing activities was $55.4 million for the six months ended February 28, 1997 compared to $1.8 million for the comparable period in fiscal 1996. Net cash used in investing activities increased primarily due to the purchase of marketable securities in the six months ended February 28, 1997, which primarily represents investment of the proceeds from the Offering. Net cash provided by financing activities was $64 million for the six months ended February 28, 1997 compared to $3.4 million for the comparable period in fiscal 1996 reflecting $62.3 million of net proceeds received from the Offering in the first half of fiscal 1997. -11- 12 The Company believes that its existing cash balances, internally generated funds from operations and its available bank line of credit will provide the liquidity necessary to satisfy the Company's working capital needs, including the purchase and maintenance of inventory, the financing of the Company's accounts receivable, as well as the financing of anticipated capital expenditures. INFLATION Inflation has not had a significant impact on the Company in the past three years nor is it expected to have a significant impact in the foreseeable future. FORWARD LOOKING STATEMENTS This report contains certain "forward-looking statements" within the meaning of Section 21E of the Securities Act of 1934, which represent the Company's expectations or beliefs. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the Company's control, and actual results may differ materially depending on a variety of important factors described in the Company's filings with the SEC. -12- 13 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Not applicable. ITEM 2. CHANGES IN SECURITIES. Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company's Annual Meeting of Shareholders was held on February 6, 1997. The holders of 33,143,056 shares of Common Stock were entitled to vote at the Annual Meeting and there were present, in person or by proxy, holders of 31,654,917 shares of Common Stock (95.5% of the shares entitled to vote). The following individuals were elected as Directors of the Company to serve until the 1998 Annual Meeting by the following votes (the numbers in parentheses represent the percent of the shares of Common Stock voted at the Annual Meeting):
FOR WITHHELD AUTHORITY --- ------------------ Carl DeSantis 31,582,615 (99.8%) 72,302 (.2%) Christian Nast 31,582,465 (99.8%) 72,452 (.2%) Dean DeSantis 31,581,215 (99.8%) 73,702 (.2%) Damon DeSantis 31,581,115 (99.8%) 73,802 (.2%) Nickolas Palin 31,581,170 (99.8%) 73,747 (.2%) Stanley Leedy 31,582,570 (99.8%) 72,347 (.2%) Raymond Monteleone 31,582,670 (99.8%) 72,247 (.2%) Howard Yenke 31,582,620 (99.8%) 72,297 (.2%)
The proposal to amend the Company's Amended and Restated 1993 Stock Incentive Plan was approved as follows: 30,461,084 (96.2%) shares were cast for the proposal; 701,535 (2.2%) shares were cast against the proposal; and 97,913 (.3%) shares abstained. The proposal to amend the Company's Amended and Restated 1993 Non-Employee Director Stock Option Plan was approved as follows: 30,584,569 (96.6%) shares were cast for the proposal; 571,064 (1.8%) shares were cast against the proposal; and 104,899 (.3%) shares abstained. -13- 14 The proposal to amend the Company's 1994 Non-Employee Director Stock Option Plan was approved as follows: 30,373,908 (96.0%) shares were cast for the proposal; 782,082 (2.5%) shares were cast against the proposal; and 104,542 (.3%) shares abstained. The selection of Coopers & Lybrand L.L.P. as the Company's independent auditors for the fiscal year ending August 31, 1997 was ratified as follows: 31,558,976 (99.7%) shares were cast for the proposal; 26,173 (.1%) shares were cast against the proposal; and 69,768 (.2%) shares abstained. ITEM 5. OTHER INFORMATION. Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 10.1 - Employment Agreement dated February 3, 1997 by and between the Company and Gary Malloch. 11 - Earnings Per Share Computation. 27 - Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K. None. -14- 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. REXALL SUNDOWN, INC. Date: April 11, 1997 By: /s/ Carl DeSantis ---------------------- Carl DeSantis, Chairman of the Board Date: April 11, 1997 By: /s/ Geary Cotton -------------------- Geary Cotton, Vice President-Finance, Chief Financial Officer, Treasurer and Chief Accounting Officer -15- 16 EXHIBIT INDEX
SEQUENTIALLY NUMBERED EXHIBIT NUMBER DESCRIPTION PAGE 10.1 Employment Agreement dated February 3, 1997 by and between the Company and Gary N. Malloch. 11 Earnings Per Share Computation. 27 Financial Data Schedule (for SEC use only)
EX-10.1 2 EMPLOYMENT AGREEMENT- GARY MALLOCK 1 EXHIBIT 10.1 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is entered into as of February 3, 1997 by and between REXALL SUNDOWN, INC., a Florida corporation (the "Company"), and GARY N. MALLOCH (the "Employee"). R E C I T A L S The Company desires to employ the Employee, and the Employee desires to be employed by the Company, in accordance with the provisions contained in this Employment Agreement (the "Agreement"). NOW, THEREFORE, in consideration of the premises and the respective covenants and agreements of each of the Company and the Employee contained in this Agreement, each of the Company and the Employee agrees as follows: I. EMPLOYMENT 1.1 The Company employs the Employee and the Employee accepts such employment. Subject to the direction of the Board of Directors of the Company, the Employee shall serve as an Executive Vice President of the Company. The Employee shall have such responsibilities, perform such duties and exercise such power and authority as are inherent in, or incident to, the office of Executive Vice President. The Employee shall devote his full business time and attention and his best efforts to the performance of his duties as an employee of the Company. 1.2 During the Term (as defined in Section 2.1 below), the Employee, if elected, shall serve as a Director of the Company and/or a Director or officer of any subsidiary of the Company without any additional compensation for such services other than the compensation provided for hereunder. II. TERM 2.1 Subject to the provisions of Article V hereof, the term of the Employee's employment under this Agreement shall be for the period commencing on February 3, 1997, and terminating on February 2, 2000 (the "Term"). III. COMPENSATION 3.1 Salary. In payment for the obligations to be performed by the Employee during the Term, the Company shall pay to the Employee (subject to any applicable payroll and/or taxes required to be withheld) annual compensation ("Annual Compensation") equal to (i) a salary of Two Hundred Fifty Thousand Dollars ($250,000.00) in cash for the year commencing February 3, 1997 (with an increase of Annual Compensation to Two Hundred Seventy-Five Thousand Dollars ($275,000.00) commencing August 3, 1997) and (ii) for each succeeding year during the Term, a salary equal to that of the previous year increased by the greater of (A) 5% or (B) the percentage increase in the cost of living based upon the Revised Consumer Price Index (1982-84=100) published by the Bureau of Labor Statistics of the United States Department of Labor for Boca Raton, Florida utilizing February 1997 as the base month. 2 3.2 Payment of Salary. Payments of salary shall be made to the Employee in installments from time to time on the same dates that payments of salary are generally made to all senior management employees of the Company. 3.3 Incentive Compensation. The Company shall pay the Employee an incentive compensation bonus in an amount up to thirty-five percent (35%) of Employee's Annual Compensation for each of the Company's fiscal years during the Term hereof pursuant to the Company's Management Incentive Plan in effect from time to time. IV. CERTAIN FRINGE BENEFITS 4.1 Generally. The Employee shall be entitled to reimbursement for reasonable business expenses incurred in connection with his employment including customer entertainment. The Company shall provide the Employee with (a) an automobile allowance of $10,500 per year or, (b) an automobile (not to exceed $10,500 per year) at the Company's expense and the Company shall provide at its expense insurance and maintenance for such automobile. The Company will also provide the Employee with a car or cellular telephone, a company credit card for business travel, entertainment and gas for the Employee's automobile. The Employee shall further be entitled to receive such benefits and to participate in such benefit plans as are generally provided from time to time by the Company to its senior management employees; provided, however, that nothing contained in this Section 4.1 shall be construed to obligate the Company to provide any specific benefits to its employees generally. 4.2 Vacations. The Employee shall be entitled to such vacation time on an annual basis as is provided in accordance with the policies as are from time to time in force for the Company's employees, or as otherwise approved by the Company's President. 4.3. Moving and Relocation Expenses. The Company shall reimburse the Employee all reasonable interim living expenses prior to moving to southern Florida and shall reimburse the Employee for all reasonable moving expenses in connection with such move, including, without limitation, (a) one-way coach airfare for the Employee and his family, or the cost of land travel from North Carolina to southern Florida, (b) transportation, packing, loading and unloading of all household goods from North Carolina to southern Florida, (c) assistance with house hunting and temporary living accommodations (up to a maximum of six months), and (d) closing costs, attorneys' fees and real estate brokerage costs in connection with the sale of Employee's house; which reimbursement pursuant to this Section 4.3 shall not exceed $75,000.00 in the aggregate (subject to applicable taxes). V. TERMINATION OF EMPLOYMENT 5.1 Certain Definitions. The following terms shall have the following respective meanings when utilized in this Agreement: (a) "Acquisition of Control" shall mean: (i) any person (including a Group), without the approval of a majority of the Incumbent Directors, becoming the Beneficial Owner of, or acquiring the power to direct the exercise of voting power with respect to, directly or indirectly, securities which represent thirty percent (30%) or more of the combined voting power of the Company's outstanding 2 3 securities thereafter, whether or not some portion of such securities was owned by such person (or by any member of such Group) prior thereto; provided, however, that this provision shall not apply to acquisitions by a director, executive officer or their affiliates if such person had such status on February 3, 1997; or (ii) the Incumbent Directors cease at any time to constitute a majority of the Board of Directors, whether of (A) the Company or (B) after any cash tender offer or exchange offer, merger, consolidation or other business combination, recapitalization of the Company, sale, liquidation or dissolution (or adoption of a plan for liquidation or dissolution), or any combination of any or all of the foregoing transactions, including but not limited to a series of such transactions, any successor to the Company; provided, however, an Acquisition of Control shall not be deemed to have occurred with respect to the Employee if the action of the Employee was voluntary and would have been sufficient, without the action of others, to constitute an Acquisition of Control. (b) "Beneficial Owner" shall have the meaning provided in Section 607.0901(1)(e) of the Florida Statutes. (c) "Cause" shall mean any action by the Employee or any inaction by the Employee which is reasonably believed by the Company to constitute: (i) fraud, embezzlement, misappropriation, dishonesty or breach of trust; (ii) a felony or moral turpitude; (iii) material breach or violation of any or all of the covenants, agreements and obligations of the Employee set forth in this Agreement, other than as the result of the Employee's death or Disability; (iv) a willful or knowing failure or refusal by the Employee to perform any or all of his material duties and responsibilities as an officer of the Company, other than as the result of the Employee's death or Disability; or (v) gross negligence by the Employee in the performance of any or all of his material duties and responsibilities as an officer of the Company, other than as the result of the Employee's death or Disability; ;provided, however, that if the basis for any termination of the Employee's employment by the Company as set forth in the Termination Notice delivered by the Company to the Employee is any or all of the definitions of Cause set forth in Section 5.1(c)(iii) or Section 5.1(c)(iv) of this Agreement, then, in such event, the Employee shall have thirty (30) days from and after the date of his receipt of such Termination Notice to cure the action or inaction specified therein to the reasonable satisfaction of the Company unless thirty (30) days is not a reasonably sufficient period of time to cure such action or inaction, in which case the Employee shall have such reasonable cure time as the Company and the Employee shall mutually agree, which period shall under no circumstances exceed ninety (90) days. 3 4 (d) "Compensation" shall mean the cash payment to which Employee is entitled under the provisions of Sections 3.1 and 3.3 hereof. (e) "Disability" shall mean any mental or physical illness, condition, disability or incapacity which prevents the Employee from reasonably discharging his duties and responsibilities as an officer of the Company. If any disagreement or dispute shall arise between the Company and the Employee as to whether the Employee suffers from any Disability, then, in any such event, the Employee shall submit to the physical or mental examination of a physician licensed under the laws of the State of Florida, who shall be mutually selected by the Company and the Employee, and such physician shall make the determination of whether the Employee suffers from any Disability. In the absence of fraud or bad faith, the determination of such physician shall be final and binding upon each of the Company and the Employee. The entire cost of any such examination shall be borne solely by the Company. (f) "Group" shall mean any combination of persons knowingly participating in a joint activity or interdependent consciously parallel action toward a common goal, whether or not pursuant to an express contract; provided, however, that actions taken by a director of the Company acting as such shall not alone constitute membership in a Group. (g) "Incumbent Director" shall mean any director of the Company serving at February 1, 1997 or one elected thereafter if nominated or approved by at least two-thirds of the then Incumbent Directors. (h) "Protracted Disability" shall mean any Disability which prevents the Employee from reasonably discharging his duties and responsibilities as an officer of the Company for a period of six (6) consecutive months. (i) "Termination Date" shall mean a specific date not less than ten (10) nor more than thirty (30) days from and after the date of any Termination Notice upon which the Employee's employment by the Company shall be terminated in accordance with the provisions of this Agreement; provided, however, if the Company and the Employee extend the Employee's cure period pursuant to the proviso in Section 5.1(c) hereof, then the Termination Date shall also be so extended. (j) "Termination Notice" shall mean a written notice which (i) sets forth the specific provision of this Agreement relied upon to terminate the Employee's employment by the Company, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide the basis for the termination of the Employee's employment by the Company pursuant to the specific provision of this Agreement relied upon therein and (iii) sets forth a Termination Date. 5.2 Termination of Employment. (a) Notwithstanding the provisions of Article II hereof, this Agreement (i) shall be automatically terminated upon the death of the Employee pursuant to the provisions of Section 5.3 hereof, (ii) may be terminated at any time by the Company pursuant to the provisions of Section 5.4 or 5.5 hereof and (iii) may be terminated by the Employee pursuant to the provisions of Section 5.6 hereof. 4 5 (b) If either the Company or the Employee shall desire to terminate the Employee's employment by the Company pursuant to any of the provisions of Sections 5.4, 5.5 or 5.6 hereof, then the party causing any such termination shall give to the other party a Termination Notice. (c) If this Agreement shall be terminated pursuant to any of the provisions of this Article V, the Company shall be discharged from all of its obligations to the Employee hereunder upon its payment to the Employee of the required amount set forth in the section of this Article 5 pursuant to which such termination shall occur. 5.3 Death of Employee. If at any time during the Term the Employee shall die, then the employment of the Employee by the Company shall automatically terminate on the date of the Employee's death. In such event, not more than thirty (30) days from and after the date of the Employee's death, the Company shall pay to the Employee's estate or heirs, as the case may be, an amount in cash equal to the Employee's Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) determined as of the date of the Employee's death. 5.4 Disability of Employee. (a) If at any time during the Term the Employee shall suffer any Disability, then the Company shall be obligated to continue to pay in the ordinary and normal course of its business to the Employee or his legal representatives, as the case may be, the Employee's Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) from the date that the Employee shall first suffer any such Disability to the date that the Employee's employment by the Company shall be terminated pursuant to any of the provisions of this Agreement. (b) If the Employee shall suffer any Protracted Disability during the Term, then the Company may terminate this Agreement. In such event, in addition to any other benefits which may have been provided by the Company to the Employee or his legal representatives, as the case may be, pursuant to the provisions of Section 5.4(a) hereof, not later than thirty (30) days after the Termination Date specified in the Termination Notice, the Company shall pay to the Employee or his legal representatives, as the case may be, an amount in cash equal to the Employee's Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) determined as of the Termination Date. Subsequent to such Termination Date, the Employee or his legal representatives, as the case may be, shall also be entitled to receive any benefits which may be payable under any disability insurance policy or disability plan provided by the Company. 5.5 Termination of Employment by Company. (a) The Company may terminate this Agreement at any time with Cause. In such event, the Company shall be obligated to continue to pay in the ordinary and normal course of its business to the Employee his Annual Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) until the Termination Date. (b) The Company may terminate this Agreement at any time without Cause. If the Company shall terminate the employment of the Employee by the Company without 5 6 Cause, and not pursuant to any other provision of this Agreement, the Company shall continue to pay to the Employee the Employee's Annual Compensation (subject to any applicable payroll and/or other taxes required by law to be withheld) for the balance of the Term as provided for in Section 3.2 hereof; provided, however, if such termination occurs between February 3, 1997 and February 2, 1998, Employee shall only be entitled to receive the Annual Compensation for one (1) year. If the Employee is terminated without cause, the provisions of Section 6.1(b) hereof shall be of no further force and effect. 5.6 Change in Control. Notwithstanding any other provisions of Sections 5.1 through 5.5 hereof, if (i) there is an Acquisition of Control and, (ii) at any time within three (3) months prior to such Acquisition of Control or at any time within one (1) year thereafter, either (A) the Employee for any reason terminates his employment with the Company, or (B) the Employee's employment is terminated without Cause, then the Employee shall have the option, but not the obligation, of being paid in cash an amount equal to three (3) times his Compensation for the then current fiscal year of the Company (amounts due under this Section 5.6 are referred to as the "Payment"). If the Employee opts to receive the Payment under this Section 5.6, whether his employment is terminated by the Company or by himself, the provisions of Section 6.1(b) hereof shall be of no further force or effect. Subject to the provisions of Section 5.7 hereof, the Payment shall be made not later than three (3) months after the Employee gives notice to the Company in the form of a Termination Notice of his election under this Section 5.6. 5.7 Payments. Notwithstanding anything in the foregoing to the contrary, if any of the payments provided for in this Agreement, together with any other payments which the Employee has the right to receive from the Company, would constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code), the payments pursuant to this Agreement shall be reduced to the largest amount as will result in no portion of such payments being subject to the excise tax imposed in Section 4999 of the Internal Revenue Code; provided, however, that the Employee shall have the absolute discretion to direct the Company to pay any amount which shall be payable to him pursuant to Section 5.6 hereof in such equal annual installments as the Employee may direct, with the first such installment payable when such amount would otherwise have been payable; and further provided that the Employee shall have the absolute discretion to allocate any reductions required by this Section 5.7 from amounts due him under Section 5.6 hereof. The Company shall be obligated to comply with any directions given to it by the Employee pursuant to the preceding sentence. VI. CERTAIN RESTRICTIONS ON THE EMPLOYEE 6.1 Certain Restrictions. The Employee covenants and agrees with the Company as follows: (a) He shall not at any time, directly and indirectly, for himself or any other person, firm, corporation, partnership, association or other entity which competes in any manner with the Company or any of its subsidiaries or affiliates in the United States of America or its territories or possessions (collectively, the "Territory"), attempt to employ, employ or enter into any contractual arrangement for employment with, any employee or former employee of the Company or any of its subsidiaries or affiliates, unless such former employee shall not have been employed by the Company or any of its subsidiaries or affiliates for a period of at least one year. 6 7 (b) He shall not, during the term of this Agreement, and for a period of twelve (12) months from and after the date of termination of this Agreement, directly or indirectly, (i) acquire or own in any manner any interest in, or loan any amount to, any person, firm, partnership, corporation, association or other entity which competes in any manner with the Company or any of its subsidiaries or affiliates in the Territory, (ii) be employed by or serve as an employee, agent, officer, director of, or as a consultant to, any person, firm, partnership, corporation, association or other entity, other than the Company and its subsidiaries and affiliates, which competes in any manner with any of the Company or its subsidiaries or affiliates in the Territory, or (iii) compete in any manner with the Company or its subsidiaries or affiliates in the Territory. The foregoing provisions of this Section 6.1(b) shall not prevent the Employee from acquiring or owning not more than five percent (5%) of the equity securities of any entity whose securities are listed for trading on a national securities exchange or are regularly traded in the over-the- counter securities market. (c) He shall not at any time disclose, directly or indirectly, to any person, firm, corporation, partnership, association or other entity, any confidential information relating to the Company or any of its subsidiaries or affiliates, including, without limitation, any information concerning the financial condition, assets, personnel, procedures, techniques, products, customers, sources of leads and methods of obtaining new business or the methods generally of doing and operating the respective businesses of the Company and its subsidiaries and affiliates, trade secrets, product ideas, processes, techniques, formulas, know-how, marketing plans and strategies, except to the extent that such information is a matter of public knowledge or is required to be disclosed by law or judicial or administrative process. (d) He shall return all Company documents to the Company upon the termination of his employment by the Company. 6.2 Injunction. It is recognized and acknowledged by each of the Company and the Employee that a breach or violation by the Employee of any or all of his covenants and agreements contained in Section 6.1 hereof will cause irreparable harm and damage to the Company and its subsidiaries and affiliates in a monetary amount which would be virtually impossible to ascertain. As a result, the Employee recognizes and acknowledges that the Company and its subsidiaries and affiliates shall be entitled to a temporary restraining order and/or injunction from any court of competent jurisdiction enjoining and restraining any breach or violation by the Employee and/or his affiliates, employees, associates, partners or agents, either directly or indirectly, of any or all of the Employee's covenants and agreements contained in Section 6.1 hereof. Such right to a temporary restraining order and/or injunction shall be cumulative and in addition to whatever other rights or remedies the Company and its subsidiaries and affiliates may possess hereunder, at law or in equity. Nothing contained in this Agreement shall be construed to prevent the Company and its subsidiaries and affiliates from seeking and recovering from the Employee damages suffered by any or all of them as a result of any breach or violation by the Employee and/or his affiliates, employees, associates, partners or agents of any or all of the Employee's covenants and agreements contained in this Agreement. 6.3 Reduction in Scope. In the event that any of the covenants and agreements of the Employee contained in Section 6.1 hereof shall be held invalid or unenforceable by a court of competent jurisdiction because of its duration or geographic area, then, in any such event, such covenant or agreement shall be reduced by such court in duration or geographical area or 7 8 both to such extent as to make it valid and enforceable in the jurisdiction where such court is located, and in all other respects it shall remain in full force and effect. VII. ATTORNEYS' FEES 7.1 Prevailing Party. If any litigation shall arise between the Company and the Employee based, in whole or in part, upon this Agreement or any or all of the provisions contained herein, the prevailing party in any such litigation shall be entitled to recover from the non-prevailing party, and shall be awarded by a court of competent jurisdiction, any and all reasonable fees and disbursements of trial and appellate counsel paid, incurred or suffered by such prevailing party as the result of, arising from, or in connection with, any such litigation. VIII. MISCELLANEOUS 7.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without application of any conflicts of laws principles. The Employee waives any plea of jurisdiction as not being a resident of, or being located or conducting business in, Palm Beach County, Florida and agrees that any litigation or action directly or indirectly connected with this Agreement, shall, at the Company's election, be subject to binding arbitration administered by the American Arbitration Association in West Palm Beach, Florida. 7.3 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Employee with respect to the subject matter hereof and supersedes all prior negotiations, agreements, understandings and arrangements, both oral and written, between the Company and the Employee with respect to such subject matter. This Agreement may not be modified in any way, except by a written instrument executed by each of the Company and the Employee. 7.4 Notices. Any and all notices required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, sent by a recognized overnight carrier such as Federal Express or when deposited in the United States mail, by registered or certified mail, return receipt requested, postage prepaid, as follows: If to the Company: Rexall Sundown, Inc. 851 Broken Sound Parkway, N.W. Boca Raton, FL 33487 Attn: Richard Werber, Vice President and General Counsel If to the Employee: Gary N. Malloch 851 Broken Sound Parkway, N.W. Boca Raton, FL 33487 or to such other address as either party may from time to time give written notice of to the other. 8 9 7.5 Benefits; Binding Effect. This Agreement shall be for the benefit of, and shall be binding upon, each of the Company and the Employee and their respective heirs, personal representatives, legal representatives, successors and assigns. 7.6 Severability. The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part hereof, all of which are inserted conditionally on their being valid in law. Except as is otherwise provided in Section 6.3 hereof, if any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall be declared invalid by a court of competent jurisdiction, then, in any such event, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been inserted. 7.7 Waivers. The waiver by either party of a breach or violation of any term or provision of this Agreement by the other party shall not operate nor be construed as a waiver of any subsequent breach or violation of any provision of this Agreement nor of any other right or remedy. 7.8 Section Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of any or all of the provisions of this Agreement. 7.9 Counterparts. This Agreement may be executed in any number of counterparts and by the separate parties hereto in separate counterparts, each of which shall be deemed to constitute an original and all of which shall be deemed to be the one and the same instrument. IN WITNESS WHEREOF, each of the parties has executed and delivered this Agreement as of February 3, 1997. REXALL SUNDOWN, INC. By: -------------------------------------- Christian A. Nast, President ------------------------------------------- GARY N. MALLOCH 9 EX-11 3 EARNINGS PER SHARE COMPUTATION 1 EXHIBIT 11 REXALL SUNDOWN, INC. AND SUBSIDIARIES NET INCOME PER COMMON SHARE CALCULATION
Three Months Ended Six Months Ended ------------------------- -------------------------- February 28, February 29, February 28, February 29, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Net income $ 8,550,923 $ 4,074,088 $15,793,364 $ 7,630,240 =========== =========== =========== =========== PRIMARY Weighted average common shares outstanding(1) 33,232,563 29,997,435 32,223,063 29,856,071 Common stock equivalents(2) 1,138,351 387,747 1,173,448 349,388 ----------- ----------- ----------- ----------- Primary weighted average common shares outstanding 34,370,914 30,385,182 33,396,511 30,205,459 =========== =========== =========== =========== Primary net income per common share $ 0.25 $ 0.13 $ 0.47 $ 0.25 =========== =========== =========== =========== FULLY DILUTED Weighted average common shares outstanding(1) 33,232,563 29,997,435 32,223,063 29,856,071 Common stock equivalents(2) 1,075,576 453,893 1,094,582 412,774 ----------- ----------- ----------- ----------- Fully diluted weighted average common shares outstanding 34,308,139 30,451,328 33,317,645 30,268,845 =========== =========== =========== =========== Fully diluted net income per common share $ 0.25 $ 0.13 $ 0.47 $ 0.25 =========== =========== =========== ===========
- ---------------- (1) Represents weighted average common shares outstanding for the periods indicated. (2) Common stock equivalents associated with stock options calculated pursuant to the treasury stock method taking into consideration the tax benefit available to the Company upon the assumed exercise of qualified options. (3) All share data in the financial statements are stated using the primary earnings per share calculation as the above fully diluted calculation is anti-dilutive. EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS AUG-31-1997 FEB-28-1997 38,706,587 60,145,569 18,077,184 0 28,124,654 154,735,387 25,843,172 0 190,591,265 21,898,159 0 0 0 333,394 168,259,062 190,591,265 114,603,971 114,603,971 42,696,573 42,696,573 48,892,518 0 15,261 24,983,023 9,189,659 15,793,364 0 0 0 15,793,364 0.47 0 NET OF ALLOWANCE. NET OF DEPRECIATION. INCLUDES LONG-TERM OBLIGATIONS.
-----END PRIVACY-ENHANCED MESSAGE-----